Is iOS game Tiny Tower on track to make $3 million in its first year?

On holiday in France, I’ve been playing NimblebitTiny Tower on my wife’s iPad. It’s a marvellous game (like a free-to-play version of Little Computer People, if you are old enough to remember that), and I’m busy analysing exactly why it is such a perfect example of how to build a successful, uncynical, enjoyable free-to-play game.

Before I did that, I wanted to check that the game was as commercially successful as I thought it was. I emailed developer Ian Marsh to ask him. He very kindly shared with me this insightful public information.

What are the metrics for a successful iOS game?

Tiny Tower is a game where you build a thriving skyscraper, populated by little computer people who work in one of five different shops. You can play the game entirely for free, but there is an in-game currency (called Tower Bux) that enable you to do a variety of things (build floors, attract tenants, restock your shops) at a much faster pace. My full description of why it is so good will follow after my holiday.

Tiny Tower was developed by two people over four months of full-time development. It launched on 23rd June, and these stats are accurate to 11th July.

The game has been critically successful too. It has a 4.5 star rating on iTunes. It was featured in New & Noteworthy, iPhone Game of the Week, and What’s Hot. In the charts it reached both Top 5 Free and Top 5 Grossing.

How much money can a successful iPhone game make?

I double-checked the conversion rate stat with Ian (because my first estimate made Tiny Tower so profitable that I didn’t believe it).

The conversion rate tracks is the number of unique lifetime players divided by the number of unique lifetime paid players. In other words, you can’t just apply it directly to the DAUs to estimate the daily revenue from Tiny Tower.

So here’s what I did:

Start with 825,000 DAUs.

To estimate the MAUs, I took a ratio of DAU/MAU of 0.35, based on a successful Facebook game (see, for example, Bejeweled Blitz on Appdata, although this has recently dropped down to about 0.31)

That led to an estimate of 2.4 million MAUs

Applying a 3.8% conversion rate to the MAUs gives an estimate of 90,000 payers

Working through the different price points and splits gives an estimated gross monthly revenue of $375,000.

After Apple’s 30% cut, that’s $262,000 per month.

Here are my workings

Possible errors

I made two key assumptions in this analysis:

That Tiny Tower, DAU/MAU ratio would be similar to Bejeweled Blitz on Facebook i.e. an established game on a different platform. In the first month of a Zynga game, for example, you sometimes see DAUs/MAUs of over 0.7. If this were the case for Tiny Tower, I would need to half my revenue estimates. In the worst case (that DAUs = MAUs), net revenue would fall to $91,950 per month.

That the 3.8% conversion rate for early adopters of Tiny Tower stays constant. I’m pretty comfortable with this assumption.

If you see any errors in my assumptions, or in the calculations overall, please let me know.

Free-to-play revenue models work

Tiny Tower is another great example of free-to-play. Over 95% of players play the game for free, yet it is making a quarter of a million dollars per month. More importantly, while 45% of users choose to spend $0.99, that represents only 11% of the total revenue. (Note this holds true irrespective of my assumptions above). The $4.99 purchasers represent 61% of the revenue while the whales, despite being only 4% of the purchasers, are close to a third of the revenue.

Conclusion

People often ask me to point them to an example of a great free-to-play game. One that I would be proud to show to a non-gamer as a representation of the art and craft of game-making.

Nimblebit has emerged as the pre-eminent examplar for me. Both Pocket Frogs and Tiny Tower are marvellous, engaging, polished, fun games. They are free-to-play and, as my analysis shows, highly profitable.

If you have any interest in making free-to-play games, or just want to play some great games, go and play them. You won’t regret it (although don’t blame me if you do choose to become a whale).

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com

for example, the spreadsheet uses conversion rates on a daily basis (as quoted by ngMoco and others). Tiny Tower quoted numbers as “percentage of users ever”.

This isn’t ideal, in that in the six weeks that Tiny Tower had been out when I wrote that post, 3.8% of all users had spent some money. BUT all 3.8% of them could, theoretically, have spent every day. Or all of them could have spent only once (equally unlikely).

So it is *possible* that Tiny Tower had a 2% daily conversion rate, but only 3.8% of the total audience spent any money in the first six weeks. Possible, but unlikely.

I don’t know, and it’s a great question. I’m trying to get an answer to this…

Chris

Any idea how NimbleBit manages to avoid Apple’s ban on incentivized downloads?
While playing Tiny Tower, I keep getting these offers to download new games in exchange for free bux…
(Not that I complain as a player, just wondering – as a developer – why this is considered ok, compared to the banned offers from Tapjoy)

I’m sure you’ll have noted the cunning way in which the tutorial attempts to get you used to spending the premium currency too? This was both a good and bad mechanic in my eyes, as to a player unused to social gaming mechanics it is perfectly acceptable, to someone who has played any social games before they game is forcing you to give away a precious resource for something you have no control over.

Glad to see them doing well. I am a big fan of both games as they are, first and foremost, good games.

Absolutely, I haven’t got month on month. But with this conversion rate, I’d start thinking about to spend cash to acquire customers. It does mean that the margin might be fall from close to 100% to a more normal 25-50% over time, but it’s still amazing.

And thanks for pointing out that the 3.8% does in deed refer to purchasers, not transactions, So the total revenue may be higher.

I think one mistake in your estimate. Your translate Transactions in Paying Users. But a Paying User could do multiple transactions (at different price points).
Basically you can’t really translate Average Revenue Per Transaction in ARPU in a formula. That would mean Tiny Towers actually makes more money than your original estimate.

You are also currently missing the very important Month-on-Month evolution, to be able to make any solid projection. Your current estimate already seems very promising for them though…

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